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A joint stock corporation (Pear) was established in 2010 by 87 shareholders with an equity capital of 100.000 TL. In 2017, Pears shares have been

A joint stock corporation (Pear) was established in 2010 by 87 shareholders with an equity capital of 100.000 TL. In 2017, Pears shares have been offered to the public by one shareholder (Ahmet). Today Pear plans to increase its equity capital from 100.000 TL to 500.000 TL. The Pears corporation title (statute) states that after the capital is raised, the equity capital is 500.000 TL which consists of 1.000.000 shares where value of each share is 0,50 TL.

Currently, each lot of shares of Pear trades at 10 TL in the Borsa Istanbul. Pear sets the price of a share for the pre-emptive rights at the nominal value of the shares rather than the market value of those shares. (1 lot denotes 1 TL shares in Borsa Istanbul)

1) How would you explain such a decision in terms of the benefits of the corporation?

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